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Pulling Art Sales Out of Thinning Air

AT an opening at his Madison Avenue gallery a few weeks ago, Larry Gagosian wore a dark suit with a window-pane pattern and a look on his face that said, “Don’t ask.”

He stood near the reception desk, beside several of the many gallerinas he employs, as a few hundred people milled around a collection of new photographs by Alec Soth and a cache of paintings by Andy Warhol that he bought last year, reportedly for $200 million. In an art market that has recently gone Code Xanax, neither he nor his gallery radiated any hints of distress — though hints of distress have never been the Gagosian style.

Since opening a schlocky poster shop in Los Angeles in the early 1970s, Mr. Gagosian, 63, has built a contemporary and modern art empire unlike any other the business has ever seen, with galleries in New York, Los Angeles, London and Rome. His stable of talent — nearly all of them poached from rivals — includes seven- and eight-figure luminaries like Richard Prince, Jeff Koons and Damien Hirst. And the profits from primary-market sales are dwarfed by the riches that Mr. Gagosian has earned by helping the superrich quietly sell masterpieces to one another.

Dogged, unreadable and enamored with risk, he has long held some of the best hands in the vast Texas hold ’em game that is the art market. But that was before Dow 6,600, before virtually everything with a price tag went on sale. Auction houses have begun to report sales that are less than half their level a year ago. In November 2007, the Christie’s evening sale of postwar contemporary art in New York totaled nearly $325 million; in 2008, the same sale brought in just $113 million. A share of Sotheby’s stock, which peaked above $50 in late 2007, now trades in the $6 range.

His business is the ultimate black-box operation, a never-ending and international swirl of cash and canvas that is built for maximum secrecy. What is certain is that his overhead is a multiple of his competitors’. Also certain is that the prices of work by the young artists he has been luring into his galleries — prices that have doubled or tripled in some cases, courtesy of his imprimatur — are falling like bank stocks. Worst of all, the days of the $75 million private deal have ground to a halt.

Small stuff is going wrong, too. A recent deal that Gagosian Gallery had struck to buy $3 million in gold bricks for a show by the artist Chris Burden was frozen when it turned out that the bricks had been acquired from a company owned by Allen Stanford, who stands accused of a vast fraud.

Mr. Gagosian has “a well-fortified ship, but he’s up against the perfect storm,” says Ed Ruscha, a major artist in Mr. Gagosian’s roster and a longtime friend. “Everyone is on red alert there.”

But Mr. Gagosian, who wouldn’t return calls for this article, is nothing if not a master of financial brinkmanship, and he has survived numerous death-watch experiences over the years. And there are, it turns out, curators and advisers who believe that he will fare just fine in the coming years, as legions of vaguely embarrassed collectors look to raise needed money, as privately as possible.

Even so, Mr. Gagosian is quietly bracing for the worst. A few months ago, he sent an e-mail ultimatum to staff members that was quickly a blog sensation, threatening to fire anyone who wasn’t moving the product. “The luxury of carrying under-performing employees,” he wrote, “is now a thing of the past.”

But to use an analogy that this poker player would understand, Mr. Gagosian is all in. He showed up at the Yves Saint Laurent auction in Paris last month, accompanying the Russian billionaire Roman A. Abramovich. Mr. Gagosian is still on the cocktail circuit, and he’s still hosting parties in his town house on the Upper East Side, which has a lap pool and lots of sleek furniture. The gatherings — a mix of millionaires, celebrities and art stars — are carefully engineered marketing opportunities, though they don’t seem that way to attendees.

“It probably has to do with business, but it doesn’t feel like business,” says Steve Martin, the actor and a collector who has been to events at Mr. Gagosian’s home. “He’s a great host, smiles when he greets you, serves great food. There’s interesting people, writers, a couple Wall Street people, artists. And when you go there for a party for an artist, it feels like a party for that artist, rather than a sales tool.”

In the midst of the scariest art downturn in more than a decade, Mr. Gagosian is sticking with his Hermès suits and jetting around on a private plane. Sporting a helmet of silvery hair and looking like a cross between an aging bon vivant and a secret agent, he still radiates total confidence — which, these days, not everyone is buying. No dealer rode the art to the same thin-air heights as Mr. Gagosian. Which might mean he has the farthest to fall.

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Credit
Charlie Powell

IT takes a lot of calls to find people to talk about Larry Gagosian. Part of the problem is that nobody sees much margin in candidly assessing a man who wields the power that he does, and part of it is the art world’s premium on discretion.

Friends of his ask to go off the record only so they can pay banal compliments like “I really like him.” One former employee turned gallery owner just hung up at the mention of his name. A woman who remembered him from high school in Van Nuys, Calif., and who had since seen him at gallery events, said, “He was as mysterious then as he is today,” quickly adding, “But if you use my name you’ll be in trouble with me.”

The most elusive interview of all is Mr. Gagosian himself, who has not spoken to anyone profiling him for about a decade.

There are certainly plenty of topics that might make Mr. Gagosian hesitant to step in front of a reporter’s microphone. Like the $4 million settlement he paid after federal prosecutors accused him and three partners in 2003 of failing to pay taxes on the sale of 58 works of art. There are also a lot of tales from former employees of almost comically cold-blooded behavior. One former underling says he once told Mr. Gagosian that a deal to commission a Richard Serra sculpture for a couple had been called off because the wife had developed cancer.

“All your clients are dead or dying,” Mr. Gagosian huffed, and then hung up, according to this person.

Cultivating some Oz-like mystique also seems like part of Mr. Gagosian’s purposefully opaque persona. But his media-wariness could stem from his belief that he doesn’t owe anyone explanations. He has created a business without shareholders, partners or even an heir apparent. He has arranged his life so that he can ignore anyone he’d like to ignore. When outlandish-sounding rumors about him are rampant, he seems to get a kick out of letting them run unchecked.

“I’ve heard every one in the book,” says David Zwirner, a dealer. “ ‘The Feds are there. He owes $200 million. He’s going to be shut down. He’s going to be shot by Russian mobsters.’ Sometimes I think Larry himself comes up with these rumors because he likes people to talk about him.”

Mr. Gagosian seems to inspire chatter in the gallery world for the same reason a magician inspires whispers: nobody quite knows how he does it. The current show at his Chelsea Gallery on West 24th Street in Manhattan, for instance, is a retrospective of the Italian artist Piero Manzoni, which the New York Times critic Holland Cotter called “an amazement.”

Walk around Chelsea long enough and you can’t help but conclude that Mr. Gagosian is somehow playing chess to the rest of the gallery world’s checkers. His peers in the business tend to stare with a mix of amazement and skepticism. It’s telling that he is not a member of the Art Dealers Association of America, an invitation-only group. The president of the organization, Roland Augustine, declined to say why.

Mr. Zwirner says: “I thought about sponsoring him a while ago. But everyone would assume I was nuts.”

LARRY GAGOSIAN wasn’t the first dealer to realize that art was a commodity, and that for the right price anyone would part with anything. But he brought a brazenness to this once-genteel realm that left rivals speechless. With a Rolodex filled with hedge fund investors, Russian oligarchs and real estate magnates, he would pitch paintings that weren’t even for sale, knowing that if the offer were large enough, the owner would thank him.

“Larry made it a business deal and business guys were more comfortable with that,” said Maurice Tuchman, an art consultant and former chairman of modern art at the Los Angeles County Museum of Art. “It was like they were buying a building, or shares of I.B.M. No rigmarole.”

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The Gagosian Gallery in Rome, one among a network that stretches to New York and beyond.Credit
Marco Di Lauro for The New York Times

No mercy, either. Harvey S. Shipley Miller still chuckles about the day a few years ago when he called Mr. Gagosian to buy a Cy Twombly drawing for a collection of works on paper for the Judith Rothschild Foundation. Mr. Miller explained that other dealers had been flexible on price — the pieces were being acquired by a charity, after all, and ultimately would be part of a collection in the Museum of Modern Art in New York. “He wouldn’t budge,” Mr. Miller recalls. “So I said, ‘How about $100,000 off?’”

No, Mr. Gagosian replied.

“How about $25,000 off?”

“Nope, I can’t do it.”

“O.K., Larry,” Mr. Miller said, exasperated. “How about $1? Can you give us a dollar off?”

“I said, ‘No thanks; I’m on a diet,’ ” Mr. Miller recalls, still savoring the absurdity of the moment. “I mean, what is that about? Obviously, buying me lunch will cost him more than a dollar!”

To understand Mr. Gagosian’s success you need to understand that the postwar art world is basically a stock market with a couple of thousand really valuable shares. Few people have any idea where those shares are located, because they’re hanging in the homes and sitting in the warehouses of collectors, who, for obvious security reasons, tend to keep their holdings well-guarded secrets.

If you want to spend $30 million on a de Kooning, you can check what’s in the catalogs of the coming Sotheby’s and Christie’s sales. But if you don’t find what you want, you’ll probably call Mr. Gagosian. One of his talents is simply ingratiating himself with the richest collectors in the world, which gives him access to their homes, which allows him to take note of what great works are where. By all accounts he has an excellent memory, but his secret weapon, if it can be called that, is the lowly camera, which he’s been known to use on the Q.T.

“I was in Larry’s office once and I saw Polaroids of pieces that were in my home,” says Douglas Cramer, a former television executive and longtime collector. Mr. Cramer was startled, then amused, and surmises that Mr. Gagosian took the photos while Mr. Cramer was answering the phone or in the bathroom: “What do you say to someone who at that point is a good friend, who is getting you all this great art?”

Mr. Gagosian has sold dozens of paintings, acquaintances say, with photographs, transparencies or pages ripped from magazines. And if you tell him what you want, there’s a good chance he’ll know where it is, and a decent chance he’ll know how much money it will take to pry it from the wall of its owner.

“I remember 15 years ago telling him that I wanted a Susan Rothenberg horse,” says Eli Broad, a real estate magnate and major collector. “There’s only about a dozen, I think. And he called this art dealer in St. Louis, who had one on his dining room wall. It wasn’t for sale.”

Until it was. Mr. Broad recalls acquiring it for $300,000.

In many instances, Mr. Gagosian is effecting trades in which none of the parties know the identity of anyone else. Collectors say they typically receive calls from him saying something like, “If you want that Francis Bacon, you need to give me your Lichtenstein and the two Basquiats.” Who is on the other side of that trade, or whether the Bacon came from Mr. Gagosian’s private stash, is never discussed.

His database, Mr. Cramer says, “is a Fort Knox of information.”

Mr. Gagosian, in short, is a one-man Nasdaq, an exchange where he helps set the price, not to mention the size of his commission. Unlike an actual stock exchange, though, this one is always open for business, and when it doesn’t get expected trades, it gets loud and profane. Mr. Gagosian has been known to pepper art consultants contemplating the terms of a deal with 20 calls in a single day, and if the answer isn’t the one he wants, you’re advised to keep the children away from the phone.

“He’s something of a genius,” says Peter Schjeldahl, art critic of The New Yorker who has attended many of Mr. Gagosian’s shows. “We think of genius as being complicated. But geniuses have the fewest moving parts.” He added: “Gagosian is simple. He’s basically a shark, a feeding machine.”

If true, he is a feeding machine with no “off” switch. Mr. Gagosian has collapsed his private and professional life into one seamless whole, acquaintances say. One art adviser, who says he likes Mr. Gagosian, believes that the day after he stops representing deep-pocketed clients is the day Mr. Gagosian ceases to acknowledge him on the street.

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Larry Gagosian, right, and his gallery in Beverly Hills held a reception for the opening of an exhibit of paintings by Julian Schnabel, left, the artist and film director, in February 2008.Credit
Frazer Harrison/Getty Images

A former girlfriend, Nicollette Ramirez, says that their vacation destinations were selected based on where collectors were headed, and where business could be done. Only rarely, during their three years of dating, did she catch a glimpse of the person underneath the deal maker.

“Even with the people closest to him, like a lover, there’s always a barrier, a facade, which is not ever really down,” says Ms. Ramirez, who is still in touch with Mr. Gagosian, “because he has no time to indulge in the things that happen t0 most human beings, like falling in love, marriage. Those are not his priorities.”

MANY people at the top of the art business started with loads of family money or well-connected parents. Mr. Gagosian had neither. He grew up in modest circumstances, with a father who was an accountant — an ornery, unaffectionate man who drank too much, as Ms. Ramirez recalls Mr. Gagosian describing him to her. Mr. Gagosian’s mother was an actress who became a homemaker.

He was an English major at U.C.L.A. and married while still a student, in a five-minute ceremony in Las Vegas, to a woman named Gwyn Ellen Garside. They were separated after 16 days; Mr. Gagosian would never marry again and never had children.

He worked briefly in an entry-level job at the William Morris Agency before decamping to sell posters on the sidewalk near the U.C.L.A. campus — gauzy images in the kittens-with-yarn vein. He later upgraded to prints by artists like Diane Arbus and Lee Friedlander, and by 1980, he was showing Sol LeWitt sculptures and work by Richard Serra, Jean-Michel Basquiat and David Salle. Mr. Schjeldahl, the art critic, attended the Salle show and found an “aftershave-ad-handsome” owner who said he was giving the art business two years to prove itself. Then he’d try real estate.

Mr. Gagosian never bothered to hide his interest in making scads of money, but he quickly developed a refined eye for great art and how to showcase it. He opened a gallery in Chelsea, one of the first in that neighborhood, in 1985, and scored some high-profile triumphs that put him on the Manhattan art map. Those include a cold call to the Connecticut home of Emily and Burton Tremaine, owners of “Victory Boogie-Woogie,” by Piet Mondrian, which was sold to Si Newhouse for $12 million.

Mr. Gagosian also befriended and later co-owned a gallery with the courtly Leo Castelli, the embodiment of the old-school dealer. For years, Mr. Gagosian has shown up at auctions around the world, often to place record-setting bids, usually on behalf of collectors who want anonymity or who are allowing him to burnish his brand.

“It’s an accommodation,” Mr. Broad says of the occasions when he lets Mr. Gagosian wave a paddle on his behalf. “He loves to see his name in The New York Times.”

MR. GAGOSIAN’S best hope for the future may be the swelling ranks of the newly cash-tight wealthy. As the recession erodes more of their wealth, they might sell privately through him, either because they don’t want anyone to know they need the money or because they think he can fetch a higher price than the auction houses, which in slow markets have trouble creating the jump-ball excitement that sellers love.

But it’s not a market he will have to himself, because Sotheby’s and Christie’s do private sales as well and are in far more niches.

Were Mr. Gagosian to actually flame out, many in the business would quietly exult. But that would be a mistake, says Stefania Bortolami, a gallery owner.

Ms. Bortolami isn’t alone in believing that Mr. Gagosian has achieved the contemporary art market’s version of too big to fail, though for reasons that have nothing to do with toxic assets. The glamour and networking energy that he has brought to the business added a zero to the price of just about everything, Ms. Bortolami says. If his business were to fold, the new buyers he brought to the market, as well as a lot of added, buzz-laden value, would disappear along with him.

Ed Ruscha says he won’t let that happen. “If it springs a leak,” he says of the Good Ship Gagosian, “I will roll up one of my paintings and plug the hole. As long as Cy Twombly does the same.”

Barclay Walsh contributed reporting.

A version of this article appears in print on , on Page BU1 of the New York edition with the headline: Pulling Art Sales Out of Thinning Air. Order Reprints|Today's Paper|Subscribe